Corporate Social Responsibility of Business

A Tract Book Essay

By

Anthony J. Fejfar, J.D., Esq., Coif

© Copyright 2007 by Anthony J. Fejfar

Previously, David Engel wrote an interesting article dealing with

social responsibility of business (David L. Engel, An Approach to

Corporate Social Responsibility, 32 Stanford Law Review 1 (1979)). I wrote

a response to that article, entitled, Anthony J. Fejfar, Corporate Voluntarism:

Panacea or Plague, A Question of Horizon, 17 Delaware Journal of

Corporate Law 859 (1992). In this Essay I will summarizing some of

those arguments and will be presenting some new arguments in favor of

Social Responsibility of Business.

In his Book, John Rawls, A Theory of Justice (1971), Rawls argues

that a rational and autonomous person in an “Original Position,” would

make certain choices. I we place an ideal shareholder in the Original

Position, it is argued that a Property oriented Liberal would choose to

maximize profit at the expense of everyone else. It is even argued that the

Property oriented Liberal would favor corporate lobbying which would

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result in “unjust” laws which would enable the corporation to make even

more money. In such a situation, it is argued that corporations would be

placed above the law in violation of Liberal principles such as equal

protection and fair legislative representation, and, that this is unjust.

On the other hand, Duty-Conscience oriented Liberals take the

position that they can act autonomously in a socially responsible manner,

even if this is not profit maximizing, at least in the short term. The idea is

that persons are not supposed to harm others and that the law cannot regulate

every circumstance. Therefore, business ethics are needed to ensure that the

corporation is acting properly. The counterargument to this, however, is

that ethics are subjective and that ethics should not be used at the expense of

the profits which should be going to the shareholders.

A third approach to the foregoing is to argue that Liberalism that

works, is based upon Natural Law and Metaphysics. On this approach,

every corporation has a duty to be ethical and responsible, objectively using

the Natural Law decision-making tool, known as the Ethical Matrix. The

Ethical Matrix utilizes four complementary Natural Law Principles:

Reciprocity, Utility, Proportionality, and Equity.

Reciprocity can be used in a variety of different ways as an ethical

principle. In the first instance, reciprocity means, “treat another as you

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would wish to be treated in similar circumstances.” In other words, never

do something to someone else unless you would like to have it done to you

in similar circumstances. Additionally, reciprocity means, “as you judge,

so you shall be judged.” Finally, reciprocity means, “as you treat others so

you shall be treated.” This is a variation of the law of Karma, the law of

cause and effect.

The second Natural Law Ethical Principle is that of Utility. Utility

means, “maximization of Value.” In order to maximize value, you must

have a scale of values against which to measure your conduct. As a Liberal,

my highest value is Rational Self Interest. My second highest value is my

Autonomy. My third highest value is to help others, especially those in

need. I suggest that you stick with the first two values, as locked in, and

then experiment from there on your own. I find the Old Testament Book of

Isaiah to be very persuasive, so I choose as my third value, trying to help

others, especially those in need.

The third Natural Law Ethical Principle is that of Proportionality.

Proportionality is a mathematical ethical concept. Perfect proportionality is

found in a 1:1 ratio, and geometrically in the idea of an equalateral triangle

dissected down the middle by a line which is perpendicular to the base of the

triangle. The two sides mirror each other perfectly and are perfectly

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proportional. Proportionality is found in the idea that the amount a person

is damaged should be equal to the amount of damages paid to the person by

the wrongdoer. Proportionality also mean equality before the law. All

other things being equal, two similarly situated persons should be treated

equally, or the same, before the law.

Finally, the last Natural Law Ethical Principle is Equity. Equity

favors the one in need, especially the poor, the mentally handicapped, the

physically handicapped, the elderly. Equity makes an Equitable Exception

from a general rule at law, based upon need. While it is true that Equity

follows the Law, it is also true that the Law must be Equitably interpreted.

Equity abhors an injustice, especially when there is no adequate remedy at

law.

The way the Ethical Matrix works, then, is that one places oneself in a

position, reciprocally based upon certain values flowing from Utility.

Typically, then, you try to generate a general rule using Proportionality.

Finally, one double checks with Equity to see if there are grounds for an

Equitable Exception from the rule generated at law. I argue that, all other

things being equal, this approach will produce a profit for the business

decisionmaker.